Early, Transparent Financial Communications

A PATIENT FRIENDLY BILLING® Recommended Practice

This statement specifically addresses patients' rights to understand and prepare for their financial obligation at the earliest point possible in the care experience. It does not address the lack of sustainable health insurance for all, which is a grave shortcoming that destabilizes our healthcare system and our economy.

The issue: consumer expectations and engagement

Patients want to know what they will be expected to pay for healthcare services before they incur the costs. Financial discussions that occur after services are delivered deprive patients of the ability to make informed choices about their treatment options.

Patients who may have difficulty paying their medical bills will want access to Medicaid, charity care, or other financial assistance programs. Delaying financial discussions with these patients will reduce their ability to access these programs and will often result in additional billing and collecting costs for charges that providers are unlikely to collect. This is painful for both the patient and the provider alike.

Patient Friendly Billing Recommended Practice

Early, transparent financial communications are the cornerstone of the Patient Friendly Billing project's vision for truly patient-focused financial services. As patients become responsible for a larger portion of their hospital bills, it becomes increasingly important that they understand their expected out-of-pocket costs and resolve how they will handle their medical bills before they incur the costs of services (except in emergency situations, of course). This offers them the opportunity to comparison shop for services, learn about payment alternatives (including financial assistance), and explore other alternatives with their own physicians.

This recommendation is based on patient focus group research conducted for the Patient Friendly Billing project, and experiences related by patient financial service professionals. Professionals who work in hospitals that provide early, transparent financial communications tell us that patients who know what their payment obligations and arrangements are before they have the service are usually significantly less anxious about their healthcare bills.

Gathering pre-service financial information

Pre-service healthcare financial communications can use a variety of methods to try to assess patients' ability to pay their medical bills. These methods range from paper applications to sophisticated on-line credit analysis software. Some consumers and advocates are concerned that such tools will be used to deny services to patients who cannot afford them. At least one state legislature has sought to bar these tools.

HFMA believes that these tools have great potential to benefit consumers. They:

Allow consumers to make informed decisions about their care by helping patients understand their financial options and work out agreed upon and reasonable payment plans before costs are incurred

Simplify and expedite the process of enrolling in financial assistance programs

Avoid collection efforts for patients when it has been determined that they do not have the means to pay their bills

Easing financial assistance applications

Determining the amount of financial assistance for which a patient is eligible is based largely on information supplied by the patient or someone acting on the patient's behalf.

Unfortunately, for many reasons, patients are frequently unwilling or unable to provide sufficient information for the hospital staff to reliably determine eligibility. These reasons can range from literacy issues to fear of denial to lack of understanding of healthcare payments and sources of assistance that may be available. Many hospitals use data similar to credit reports, Medicaid enrollment information, and other automated tools to reduce the application burden on patients seeking financial assistance. In addition to reducing stress on patients, these tools also help make providers more efficient and reduce their healthcare administration costs.

Conclusion: A vision for patients' financial experiences

Based on the Patient Friendly Billing project's research and dialogue over the past eight years, we believe patients' optimal financial experience for non-emergency services should be based on the following steps:

Providers gather detailed information before and at the time of service to prospectively estimate patients' expected out-of-pocket costs.

Providers use tools to help estimate the amounts and terms of payment that patients can afford. The resulting information allows providers to:
--Identify and aid patients who need financial assistance, either through in-house programs, Medicaid, or other assistance programs.
--Efficiently reach an agreement on payment amounts and terms for patients who are able to pay all or a portion of their bills.

Providers communicate earlier, so that patients understand their financial obligation before they undergo treatment.

If urgent care needs prevent these steps from being taken before services are delivered, providers complete these steps as soon as appropriate after service.

Under this scenario, the billing and collection process becomes a verification of what the patient already expects. Each patient's personal payments will be related to what they can afford to pay, and providers are more likely to receive sufficient payment from all appropriate payment sources so that they can continue to provide quality healthcare services.

A PATIENT FRIENDLY BILLING® Recommended Practice

This statement specifically addresses patients' rights to understand and prepare for their financial obligation at the earliest point possible in the care experience. It does not address the lack of sustainable health insurance for all, which is a grave shortcoming that destabilizes our healthcare system and our economy.

The issue: consumer expectations and engagement

Patients want to know what they will be expected to pay for healthcare services before they incur the costs. Financial discussions that occur after services are delivered deprive patients of the ability to make informed choices about their treatment options.

Patients who may have difficulty paying their medical bills will want access to Medicaid, charity care, or other financial assistance programs. Delaying financial discussions with these patients will reduce their ability to access these programs and will often result in additional billing and collecting costs for charges that providers are unlikely to collect. This is painful for both the patient and the provider alike.

Patient Friendly Billing Recommended Practice

Early, transparent financial communications are the cornerstone of the Patient Friendly Billing project's vision for truly patient-focused financial services. As patients become responsible for a larger portion of their hospital bills, it becomes increasingly important that they understand their expected out-of-pocket costs and resolve how they will handle their medical bills before they incur the costs of services (except in emergency situations, of course). This offers them the opportunity to comparison shop for services, learn about payment alternatives (including financial assistance), and explore other alternatives with their own physicians.

This recommendation is based on patient focus group research conducted for the Patient Friendly Billing project, and experiences related by patient financial service professionals. Professionals who work in hospitals that provide early, transparent financial communications tell us that patients who know what their payment obligations and arrangements are before they have the service are usually significantly less anxious about their healthcare bills.

Gathering pre-service financial information

Pre-service healthcare financial communications can use a variety of methods to try to assess patients' ability to pay their medical bills. These methods range from paper applications to sophisticated on-line credit analysis software. Some consumers and advocates are concerned that such tools will be used to deny services to patients who cannot afford them. At least one state legislature has sought to bar these tools.

HFMA believes that these tools have great potential to benefit consumers. They:

Allow consumers to make informed decisions about their care by helping patients understand their financial options and work out agreed upon and reasonable payment plans before costs are incurred

Simplify and expedite the process of enrolling in financial assistance programs

Avoid collection efforts for patients when it has been determined that they do not have the means to pay their bills

Easing financial assistance applications

Determining the amount of financial assistance for which a patient is eligible is based largely on information supplied by the patient or someone acting on the patient's behalf.

Unfortunately, for many reasons, patients are frequently unwilling or unable to provide sufficient information for the hospital staff to reliably determine eligibility. These reasons can range from literacy issues to fear of denial to lack of understanding of healthcare payments and sources of assistance that may be available. Many hospitals use data similar to credit reports, Medicaid enrollment information, and other automated tools to reduce the application burden on patients seeking financial assistance. In addition to reducing stress on patients, these tools also help make providers more efficient and reduce their healthcare administration costs.

Conclusion: A vision for patients' financial experiences

Based on the Patient Friendly Billing project's research and dialogue over the past eight years, we believe patients' optimal financial experience for non-emergency services should be based on the following steps:

Providers gather detailed information before and at the time of service to prospectively estimate patients' expected out-of-pocket costs.

Providers use tools to help estimate the amounts and terms of payment that patients can afford. The resulting information allows providers to:
--Identify and aid patients who need financial assistance, either through in-house programs, Medicaid, or other assistance programs.
--Efficiently reach an agreement on payment amounts and terms for patients who are able to pay all or a portion of their bills.

Providers communicate earlier, so that patients understand their financial obligation before they undergo treatment.

If urgent care needs prevent these steps from being taken before services are delivered, providers complete these steps as soon as appropriate after service.

Under this scenario, the billing and collection process becomes a verification of what the patient already expects. Each patient's personal payments will be related to what they can afford to pay, and providers are more likely to receive sufficient payment from all appropriate payment sources so that they can continue to provide quality healthcare services.

Victoria Terekhova, senior strategist for Enterprise Healthcare at KeyBank, discusses key challenges when developing long-term strategy in a rapidly changing industry, and the role the right banking partner can play in helping healthcare providers navigate the opportunities before them.